Ahead of the Curve

The lending environment is undergoing a worrying change. Funds that European direct lenders have raised but not yet deployed are at an all-time high and banks in most Western-European jurisdictions have renewed lending following years of reticence after the global financial crisis, leading to increased competition amongst lenders in the small and medium enterprise (SME) market.

Austria attracts foreign pension funds – bourse

AUSTRIA – Developments in the Austrian stock market are attracting foreign pension funds, a bourse official has told IPE.

The surging Austrian stock market – with the benchmark ATX index at historic highs – has been boosted by a new state-subsidized retirement product and the privatisation of partly state-owned companies said Elvira Zak, head of media relations at Wiener Börse AG said.

She added the exchange has had “two very successful years”. The new retirement product is 40% invested in Austrian shares.

“These successful developments have helped gain the attention of foreign pension funds that now tend to invest more in Austrian shares.”

But investing in equities, especially domestic equities, had not yet sunk in with Austrian pension funds, which see equities in general as a “casino”.

“Unfortunately, the share of Austrian equity in domestic pension funds is poor, only about one percent,” she commented.

“The development in 2004 definitely marks the peak of a success story, which has lasted for over three years. In international comparison the ATX frequently outperformed many of the well-known indices worldwide,” she continued.

“Many of our strategies and work together with the stakeholders, issuers, members and the key representative of the Austrian economy paid off,” Zak explained.

The ATX rose over the 2,000-point mark for the first time in July – up 91% on 2000. Total market capitalisation rose to 54.7 billion euros as of September - up 84% in three years.

The exchange, however, is working to raise its profile both abroad and domestically.

ATX has entered an agreement with its Budapest counterpart and has had several “road shows” in London, Paris, New York, Geneva, Zurich and Milan.

But the stock exchange also wants to see Austrian stocks in domestic pension funds rise to five percent and is going to speak to pension funds, highlighting how well stocks have performed.